Case Law Details
CIT Vs Khandelwal Shringi & Co. (Rajasthan High Court)
In this case CIT(A) held that he do not agree with decision of the assessing officer to use the agreement to sell 13.25 hectares of land at Rs. 8.25 crores that was never executed, and the offer to purchase 10.21 hectares, a part of the same 13.25 hectares, for Rs. 7.00 crores that was not accepted and taken to a logical conclusion, as evidence of fair market value of the land in question. Besides these two the assessing officer did not bring any other evidence to show that market value of impugned 10.21 hectares was Rs. 7.00 crores. Further, I hold that the comparison by the assessing officer between qualitatively different agreements with completely different terms and conditions was not appropriate. The assessing officer did not bring on record any evidence to show that the appellant had indeed paid Rs. 7.00 crores to Satya Narain Kanchhal and Rukmani Devi Kanchhal for land admeasuring 10.21 hectares. In given facts and circumstances, the decision of the assessing officer to add Rs. 5.13 crores is not confirmed.
He relied on the decision of Rajasthan High Court in the case of CIT vs. K.K. Enterprises reported in (2008) 13 DTR 289 (Raj.) wherein it has been held as under:-
“6. So far as question No. 1 is concerned, Assessee sold his plots at an average rate of Rs. 18.66 per sq.ft. The Assessing Officer mainly relied on the statement of Shri S.L. Dak and the rates taken by the Sub Registrar, and adopted value of the plots at Rs. 40 per sq.ft. Learned ITAT has mentioned in its order that one of the purchasers of two plots, viz. Shri B.S. Bomb, was also examined by Assessing Officer, who had purchased two plots worth Rs. 36,000 each, and on same consideration sale-deeds were registered. Assessing Officer has not discussed the statement of Mr. Bomb. Apparently, there was no other reliable material on record before the Assessing Authority to assume sale of plots at Rs. 40 per sq.ft. Learned Counsel for the appellant relied on 226 ITR 344 (Smt. Amar Kumari Surana v. Commissioner of Income Tax), in which on account of sufficient material on record and in absence of explanation by the assessee, an inference was drawn that property was sold for more amount than shown in the sale deeds. This case does not help to the revenue as in the case in hand, apparently, there was no material before the Assessing Officer to come to a conclusion that property was sold at the rate of Rs. 40 per sq.ft. Learned Counsel for the respondent placed reliance on MANU/SC/0300/1981 : [1981] 131 ITR 597(SC) (K.P. Verghese v. ITO), in which it was held that assessee must be shown to have received more than what is declared or disclosed by him as consideration. Difference in market value and consideration declared in sale-deed is not sufficient for assumption of higher consideration. He also placed reliance on MANU/SC/0248/1986 : [1986]159ITR71(SC) (CIT v. Shivakami Co. Pvt. Ltd.), in which it was held that unless there is evidence that more than what was stated was received, no higher price can be taken to be the basis for computation of capital gains. It was further held that capital gains tax is intended to tax the gains of the assessee, not what an assessee might have gained, and what is not gained cannot be computed as gained. He also placed reliance on two judgments of this Court. In the case reported in (2008) 3 DTR (Raj) 115 (CIT v. Bhanwarlal Murwatiya), it was held that the question whether any higher consideration than the one mentioned in the sale deed did pass from the assessee to the seller is a pure question of fact and the department having failed to show that any relevant material has been ignored or misread by the CIT(A) or the Tribunal while deleting the addition made by AO, such questions, in any case, are required to be answered against the Revenue and in favour of the assessee. In other case reported in (2008) 3 DTR 142 (CIT v. Kishan Kumar and Ors.), it was held that while computing undisclosed income under Section 158BB, the rates of property fixed by Stamp Valuation Authority for the purposes of registration of sale deeds, cannot be taken to be the price for which the property was purchased.
7. Aforesaid citations make it clear that in absence of evidence on record, higher price for sale of land cannot be presumed from the consideration shown in registered sale deeds and rates of property fixed by Stamp Valuation Authority for registration purposes cannot be taken to be the price for which property might have been sold. Thus, there was no justification for the Assessing Officer to estimate selling price of land at Rs. 40 per sq.ft. instead of Rs. 20 per sq.ft. and for CIT(A) to presume selling price at Rs. 22 per sq.ft. and thus learned ITAT has not committed any error in allowing the appeal of the respondent assessee and hence question No. 1 is answered against Revenue.”
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